Sole Proprietorship Registration
One of the most common and cost-efficient forms of organization is a sole proprietorship. Now this type of organization in one where the entity is owned managed and controlled by one person also known as the sole proprietor. The best part about Proprietorship Firms is that they are very easy to start and have very negligible regulatory compliance requirements at every stage. However, the promoter of such an organization is deprived of host of benefits such as limited liability, corporate status, separate legal entity, independent existence, transferability, perpetual existence – which are desirable features for any business. Therefore, proprietorship registration is suited only for unorganized, small businesses that will remain small and/or have a limited period of existence.
The government of India has not provided any mechanism for the registration of a Proprietorship. Therefore, any proprietorship firm can be brought into existence of through tax registrations and other business registrations that a business is required to have as per the rules and regulations. For instance, GST Registration can be obtained in the name of the Proprietor to establish that the Proprietor is operating a business as a sole proprietorship. Thus, all the registrations for a proprietorship would be in the name of the Proprietor, making the Proprietor personally liable for all the liabilities of the Proprietorship.
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5 REASONS TO CHOOSE A PROPRIETORSHIP FIRM
- Easy to Start: Proprietorship Firms need minimal registration. Therefore, it is one of the easiest and the most cost-effective forms of business entity to start with minimal formalities. However, after starting up a Proprietorship, it is relatively harder to open a bank account or obtain a payment gateway in the name of the business – since more registrations like GST Registration may be required.
- Business Name: As we are aware of the fact that a Proprietorship firm is not a registered form of organization therefore the name of a proprietorship is also not registered.So,a proprietorship can choose to have any name but subjected to the fact that it does not infringe on any registered trademark. However, since the name is not registered, any other person can also use the same business name unless trademark registration is obtained.
- Single Promoter: Proprietorship is the only type of business entity that can be registered and operated by one person. To register a one-person company, a nominee Director is required and for all other types of entities like company or LLP or partnership firm, two or more promoters are required.
- Lower Taxes: Proprietorship with less than Rs. 3 lakhs of income is not required to pay any income tax, as proprietorships are taxed as the individual owing the business. However, unlike a company or LLP, a proprietorship cannot enjoy some of the tax deductions, which could potentially increase the tax liability.
- Easy to Close: The Proprietor and the proprietorships are one and the same for all legal purposes. Hence, there is no formality for winding up or closing a proprietorship. In most cases, to close a proprietorship, only the tax registrations obtained in the name of the proprietor must be cancelled.
- Identity Proof: PAN Card for Indian Nationals & Notarized Passport Copy for Foreign Nationals.
- Address Proof: Passport/Driving License/ Aadhar Card/ Voter id Card and Copy of Electricity Bill/ Water Bill/ Telephone Bill/ (Any of these documents shall not be more than 2 months old).
- Proof of Registered Office: Rent Agreement or Sale Deed and Copy of Electricity Bill/ Property Tax Receipt and NOC from Land Owner to use premises as Registered Office.
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FREQUENTLY ASKED QUESTIONS
How many people are required to start a Proprietorship?
Only one person is required to start a Proprietorship and a Proprietorship can have only one promoter.
What are the requirements to be a Proprietor?
The Proprietor must be an Indian citizen and a Resident of India. Non-Resident Indians and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India.
What is the capital required to start a Proprietorship?
There is no limit on the minimum capital for starting a Proprietorship. Therefore, a Proprietorship can be started with any amount of minimum capital.
How will Corpium Advisory help me start a Proprietorship?
We will understand your business requirements and help you start a Proprietorship by obtaining the relevant registrations. Corpium advisory will help you to obtain the necessary registrations and to open a bank account in the name of the firm, thereby proving an identity to the business
Will my Proprietorship firm have a separate legal identity?
No, the Proprietorship firm and the proprietors are one and the same. The PAN Card of the Proprietor will be the PAN Card of the Proprietorship business. Therefore, there will be no separate legal identity for the business. The assets and liabilities of the Proprietorship business and the Proprietor will also be one and the same.
Will my Proprietorship firm have a Certificate of Registration?
Proprietorship firms do not have a Certificate of Incorporation or Certificate of Registration. The identity and legitimacy of a Proprietorship firm is established by registering with the relevant or applicable Government authorities.